The end of 2019 marked my first eight months at Waterway Wealth Management, LLC. As the portfolio manager, my job is to work with the Waterway team to provide thought leadership and ensure client portfolios are managed to their appropriate allocation of stocks, bonds, and other asset types. From a personal perspective, I am honored to work with people – both colleagues and clients – who truly try to make a difference in the world.
I have spent the last year being introduced and getting to know many of you. Behind the scenes, I have been working closely with the team to clarify our investment philosophy, which emphasizes a long-term, goals-based approach, on-boarding new portfolio tools and analytics to help us monitor and rebalance risk exposures to the appropriate targeted level of stocks and bonds, and talking to fund managers to get a deeper understanding of how their strategies fit within our portfolios and work under different economic environments. I also represented Waterway earlier this year at a Journal of Investment Management conference of academics and practitioners at MIT, talking about the challenges related to retirement investors. This connected us to some of the premier thought leaders doing research in areas that are particularly relevant to our clients going forward.
Although 2019 was a good year for financial assets like stocks and bonds, this time last year it wasn’t so clear that markets over the following 12 months would have posted some of their best performance in recent memory. The Federal Reserve was on course to continue raising interest rates while growth was off its peak. Market volatility was increasing, stocks were dropping and interest rates on bonds remained stubbornly low. Trade issues with the rest of the world also spooked the markets.
The combination of interest rate moves, slowing growth and high market volatility pointed to an economy that was entering the latter phases of the economic cycle. Even as late as this summer, part of the yield curve, which measures what investors are willing to lend the US government over different time frames, became “inverted”. This meant that investors were getting paid less to lend over 10 years than at 1 year or less. Headlines often emphasized the “profits recession” or looming “downturn”.
The year […]